Extended Care Plan Pricing Analysis

Date: Feb 17, 2026
Requested by: Quan (Main session)
Assigned to: Vania (Finance)
Priority: High - Pricing model validation needed
Status: Awaiting COGS data + utilization rates

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CURRENT PRICING STRUCTURE

Extended Care Plans

• 1-Year: $930 (covers up to 6 ZTAGGERs/year accidental damage)
• 3-Year: $2,500 (~$833/year, 10% savings)
• 5-Year: $4,000 (~$800/year, 14% savings) + Community Launch Pack hardware

A La Carte Replacement (No Care Plan)

• ZTAGGER Pro: $300 each
• Command Center: $3,700 each

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BREAK-EVEN ANALYSIS

1-Year Plan

• Revenue: $930
• Max liability: 6 ZTAGGERs × $300 = $1,800 customer value
• Break-even COGS: <$155/unit (if customer uses all 6 replacements)

5-Year Plan

• Revenue: $4,000 over 5 years
• Max liability: 30 ZTAGGERs (6/yr × 5) + 1 Command Center @ $2,300
• Customer value: $9,000 (ZTAGs) + $3,700 (CC) = $12,700
• Break-even COGS: <$133/unit + Command Center replacement cost

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CRITICAL QUESTIONS FOR VANIA

1. COST BASIS VERIFICATION (URGENT)

• ZTAGGER Pro replacement COGS?
• Command Center COGS?
• Shipping/logistics per replacement?

Why critical: If COGS > $155/unit, 1-year plan loses money at full utilization.

2. UTILIZATION RATE ANALYSIS

• What % of customers file 0, 1-3, or 4-6 claims/year?
• Average claim rate across current Extended Care customers?
• Any outlier programs with chronic high damage?

Insurance model assumption: Profitable if most customers claim <3 units/year (50% utilization)

3. COMMUNITY LAUNCH PACK COSTING

5-Year plan includes physical kit (banners, tablecloth, standee).

• One-time cost? (Should be <$500 to preserve margin)

4. COMMAND CENTER COVERAGE RISK

• 1-Year & 3-Year: NO CC coverage
• 5-Year: 1 lifetime replacement @ $2,300 (retail $3,700)

Risk exposure: If customer files CC claim, ZTAG absorbs $1,400 discount + replacement COGS.

Options to consider:

• A. Increase 5-Year price to $4,500-5,000
• B. Cap coverage: "50% discount on one replacement" instead of fixed $2,300

5. UPGRADE CREDIT ECONOMICS

3-Year & 5-Year include "trade-in & upgrade credit after 3 years"

• What's the credit amount?
• How does this impact margin on new system sales?

6. SUPPORT LOAD COST

All plans include priority support, software updates, offline updates (3/5-year)

• Support hour cost per customer/year?
• Does this eat into profitability?

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SUMMARY TABLE

Plan	Annual Revenue	Max Liability (6 ZTAGs/yr)	Break-Even COGS/Unit	Margin at 50% Utilization
1-Year	$930	$1,800 (6 × $300)	<$155	TBD based on COGS
3-Year	$833/yr	$1,800/yr	<$139	TBD based on COGS
5-Year	$800/yr	$1,800/yr + $3,700 CC	<$133 + CC cost	TBD based on COGS

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ACTION ITEMS

1. Pull COGS data: ZTAGGER Pro, Command Center, shipping/logistics
2. Pull utilization data: Claim history from existing Extended Care customers
3. Model scenarios:
   • Best case: 30% utilization (2 claims/year avg)
   • Base case: 50% utilization (3 claims/year avg)
   • Worst case: 80% utilization (5 claims/year avg)
4. Recommend pricing adjustments if break-even analysis shows risk

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SOURCE DOCUMENT

https://docs.google.com/document/d/1I1_Bwkf8DrWMtnb2p5NFhUG2oREqDycN/edit

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NEXT STEPS

• Send analysis to Vania
• Schedule follow-up meeting if data reveals pricing gaps
• Update pricing doc if recommendations require changes
• Communicate any price changes to sales/ops teams